Obama budget includes $100B in Pell Grant cuts

Twenty percent of University students receive about $28 million in Pell Grants annually.
February 15, 2011
Correction: A previous version of this story had an incorrect figure in the headline. It has been corrected.

The Pell Grant program, which provides millions of dollars in aid to University of Minnesota students, could face steep cuts over the next 10 years under President Barack Obama’s proposed federal budget.

About 9 million students nationwide receive the federal grant, including more than 7,400 students at the University.

Kris Wright, the director of the University’s Office of Student Finance, said the Pell Grant — the "granddaddy of all financial aid programs" — is crucial to helping lower-income students attend school. At the University, about $28 million in Pell aid is distributed to students each year, with about 20 percent of the Twin Cities campus population receiving some support.

Nationally, the program has doubled in size over the past few years, with expenditures reaching more than $30 billion as award amounts increased and more people returned to school during the recession.

The cuts were part of a larger $3.7 trillion federal budget Obama announced Monday at a middle school in Baltimore. The proposal shaves more than a trillion dollars over 10 years from the federal deficit through spending freezes and tax hikes, and increases investments in energy efficiency, high-speed rail and education projects.

Students can currently receive up to two Pell Grants a year –– one for the normal academic term and another for summer classes –– with a maximum award of $5,500. Obama’s proposal would eliminate the grant for summer students and end federal subsidies on graduate student loans –– cutting about $10 billion annually.

Congressional Republicans proposed their own set of Pell changes Friday that would cut the maximum award by 15 percent and make 1.7 million additional students ineligible.

First-year urban studies student Virginie Nadimi called the grant "fundamental" to paying for school.

"It takes a lot of the stress off, knowing it’s going to be there for me all four years," she said.

Any cuts to the program would mean increased stress and more hours at her job, Nadimi said, and reduced financial aid during the summer would deter her from taking classes then.

In the past, Obama increased Pell Grant funding levels and emphasized the program’s importance to his overall education agenda.

But with growing calls to reduce the federal deficit, Obama needed to make cuts, even to programs he supports, political science professor Kathryn Pearson said.

"On the one hand he needs to satisfy the Democratic base, but on the other hand he needs to show Republicans and Congress that he’s serious about cutting the deficit," she said. "In many ways, this budget tries to have it both ways."

Negotiations on Capitol Hill over the coming months will result in a dramatically different budget than the one presented by Obama on Monday, Pearson said.

"It’s really hard to say where this will end up, other than to say it’s likely, in general, that there will be more cuts," she said. "The Republicans will want to go quite a bit further and compromise will likely be somewhere in between."

Associated Content

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